Online video plan faces challenges

A plan by Time Warner Inc. and Comcast Corp. to ensure that people who watch TV on the Web are already cable-TV subscribers faces several hurdles, including the technical -- a workable encryption system -- and the political -- whether consumers will view it as an attempt to wall off free content.

The initiative unveiled Wednesday, which Time Warner is calling TV Everywhere and Comcast has dubbed OnDemand Online, would require people to prove that they subscribe to a video delivery service -- cable, satellite or telephone -- to watch certain shows online.

Comcast, the nation’s largest cable operator, will soon begin testing the service with customers.

But a major challenge for Time Warner and Comcast is designing an authentication system that identifies a consumer as a cable-TV subscriber but also is easy to use. Consumers are already overwhelmed with online passwords in their personal and professional lives, and another one could be an impediment to adoption of a new service, experts say.

“The technology has to work for the consumer. It cannot be obtrusive,” said Quincy Smith, chief executive of CBS Interactive.

Time Warner and Comcast’s move, however, is a recognition that viewers, who long ago left the broadcast networks to watch shows on cable television, may next migrate to the Internet.

Although broadcast networks such as CBS and NBC have embraced putting their content online, many cable networks have been wary of following suit.

That’s because cable operators such as Comcast pay hefty fees to carry cable networks, and operators don’t want that same content popping up for free online because it might encourage subscribers to drop their cable service. Time Warner, which owns cable networks TNT, TBS and HBO, has not offered much of its content on the Internet out of fear that online availability would damp TV viewership. Other cable networks, not wanting to alienate cable operators, have done the same.

Time Warner and Comcast’s partnership is likely to put pressure on other online video sites to do the same. Hulu, the video site owned by NBC Universal and News Corp. -- and soon Walt Disney Co. -- is also working on an authentication system and is expected to have one in place in the coming months.

“We’re well down the road on that,” said a senior executive close to the matter.

Both Time Warner and Comcast stress that they do not view their partnership as a way to stifle the shift to viewing content online. They say it is a way to preserve the current economic model of the business while offering consumers more platforms on which to watch their favorite shows.

“It is a very innovative model that the industry has,” Time Warner Chief Executive Jeff Bewkes said Wednesday in announcing the partnership. “We are trying to take that basic structure and put it on the Internet, augmenting its appeal and its convenience.”

The two companies said they expected others to come aboard in the near future.

Jeff Gaspin, president and chief operating officer of NBC Universal’s Television Group, parent of cable channels that include USA and Bravo, said he was supportive of the concept of authentication. Less than 20% of NBC Universal’s cable content is made available online.

Other programmers including News Corp., parent of the FX cable network, and Viacom Inc., which owns several popular channels including MTV and Nickelodeon, are taking a wait-and-see approach.

Nonetheless, the prospect of two media conglomerates teaming up to reinvent how content is made available online has some advocacy groups worried.

“It is obvious TV Everywhere is not TV for everyone,” said Gigi Sohn, president of the media watchdog Public Knowledge. She added that she wanted the Justice Department to look into this arrangement for potential antitrust violations. Time Warner and Comcast, she said, want to “turn the Internet into their own private cable channel.”

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joe.flint@latimes.com

Times staff writer Meg James contributed to this report.